Tue, 29 Jun 2010 14:53:00 +0200

European shares remain hard hit ahead of Wall Street

FXstreet.com (Barcelona) - Worries of an economic slowdown in China along with resurfacing euro-zone debt jitters have European shares tracking sharp losses sustained over the Asian session. At time of writing Europe’s leading indices remain deeply lower with the Frankfurt-based DAX off by nearly 140 points or 2.24%, while the FTSE 100 and CAC 40 fare similar fates at 2.19% and 2.71% lower respectively.

Concerns over the Chinese economy originated from an unsettling downward revision for a key economic indicator by the US Conference Board. The Board late yesterday changed the figure over the month of April from 1.7% to 0.3%, a sharp contrast to March’s reading of 1.2%. The news sparked a widespread selloff in Asia, and has investors pondering the possibility of a double dip recession in key economies around the world.

What’s more, sovereign debt concerns over the euro-zone have returned as the ECB prepares for the Thursday expiration of its 1-year loan to European banks worth up to nearly $550 billion. Market players are anxious to see the ability of banks especially in hard hit periphery countries to meet obligations. And exasperating an already shaky market sentiment over the continent, Germany prepares for a Presidential election later in the week which is seen by many as a vote of confidence for the incumbent party led by Angela Merkel.